Dominic Lawson: Do we really want to give politicians more to waste?

So, dear reader, would you like to contribute to the British National Party? No? Not even a single penny? Well, that's too bad, because you're going to have to. Or at least you might, if those arguing for enhanced state funding of political parties get their way. The argument has arisen again, in the wake of The Sunday Times's sting operation, which appeared to show the Conservative co-treasurer Peter Cruddas offering influence over policy to undercover journalists pretending to be tycoons dangling the prospect of stonking donations.

Although the sting was a fine example of the necessity for subterfuge and deception in journalism (please note, Lord Leveson) the Tory party is, in fact, remarkably open about the access that money will buy. Its official website promotes something called "The Leader's Group", membership available only to those who pay £50,000 a year: "The Leader's Group is the premier supporter Group of the Conservative Party. Members are invited to join David Cameron and other senior figures... at dinners, post-Prime Ministers Questions lunches...."

Of course, this is not the same thing as "buying" policy, and although Cruddas suggested in his unwitting interview that big donors could "feed" their views into 10 Downing Street, he also warned his supposed benefactors: "Just because you donate money doesn't give you a voice at the top table to change policy. That doesn't happen." For what it's worth, my own conversations with members of the "Leader's Group" reveal that any illusions they might have had that they could influence policy have been comprehensively dashed.

As Paul Goodman, the former Tory MP, notes on the Conservative Home website: "Let me tell you what Cameron's response will be [to donors' policy suggestions over drinks]. He will smile and nod agreeably; I have worked with him and I promise you that he's really, really good at smiling and nodding agreeably... Anyway, come the end of the evening, he will say that it's been absolutely splendid, tremendous, marvellous to hear their views – first rate. After which, he will forget all about it and nip up to the Downing Street flat and play Angry Birds... or invade Libya, or do whatever it is that he feels like doing."

As a description of Cameron's insouciant modus operandi, this is quite convincing. It doesn't, however, address the wider question of the extent to which favours can be bought with donations. The best analysis of this has come from Andrew Tyrie, now the chairman of the Treasury Select Committee, but who for the past decade has been the main voice for party funding reform within the parliamentary Conservative party. In 2003, he wrote a paper called "Our politics is healthy. Our party finances stink".

This was in the days of the Blair hegemony, and Tyrie laid into the then Prime Minister over his interventions on behalf of the business interests of Bernie Ecclestone and Lakshmi Mittal, after these billionaires had offered funding to New Labour. Tyrie was not merely engaging in party politics: he also complained that "prior to 1997, about 6 per cent of public companies made donations to the Conservative Party, but 50 per cent of knighthoods and peerages went to the directors of companies who made such donations. A coincidence? I doubt it."

Yet here, too, there was a degree of openness: such knighthoods and peerages were often gazetted as being for "Political Services". Everyone knew exactly what that meant. That might seem a dodgy way to become honoured. But look at it this way. If you think it is a good thing for taxpayers to fund the vast amount of the spending of political parties, that implies that the provision of such money is a public good. So, if it is a public good, why would it be perverse to give honours to those saving the public from coughing up all the money themselves (any more than it is perverse to give honours to those who support the arts, for example)? But if it isn't a public good, why should taxpayers be required to be charged a penny for such activities?

The solution put forward by the Committee on Standards on Public Life last November was to cap individual annual donations at £10,000. This would certainly reduce any undesirable dependence on the donations of super-rich individuals. It would also marmalise the Labour Party's entire funding model based on trade union sponsorship: as the Committee observed, such a cut-off would remove well over 90 per cent of Labour's finances. So it went on to propose that the gap be met by the taxpayer, apparently at a cost of no more than 50p a year from each of us (at least to begin with).

If this is to happen, then it is up to the political parties to convince the public. Yet, as the Liberal Democrat MP Martin Horwood told the committee: "In the current context, I do not fancy going to the doorstep and explaining to people that their libraries are shutting and their day care is being closed down and we may not be able to put as much on housing benefit as we used to, but good news; do not worry, we are giving more to political parties. I think I might get a punch in the face."

As Horwood implies, the parties already get considerable funding from the taxpayer. The official opposition gets at least £5m a year in so-called "Short Money". Then, as Tyrie has observed, the BBC (and ITV) are compelled to provide the political parties with free peak airtime for political advertising, worth well over £100m in an election year: this amounts to a very large public subsidy. Indeed, in the 2010 election, the BNP was a beneficiary of this, to the consternation of many viewers.

The truth is that the political parties have for election after election spent incontinently to get their messages across, which is even odder now that the internet allows free-to-air access to the public. As Sir Hayden Phillips, the chairman of a 2007 inquiry into party funding, observed: "In the talks I had with the three main parties, they were quite open in private... that a lot of things they spend their money on were a complete waste of time." And we're supposed to pay to let them continue like that?

If the Cruddas exposé precipitates a reform of party funding, whether by tycoons or trade unions, well and good; but it doesn't follow that taxpayers should then be obliged to cough up any shortfall.

d.lawson@independent.co.uk